Strategy Management: The Innovators Solution Essay

Question:

Discuss about the Strategy Management for The innovators Solution.

Answer:

a) In the article, “Maximizing the Business Value of Web Technologies” the focus is on Motorcar industry in the USA. US motorcar industry is one best fastest growing and profit making industries in the world. In this sector, the profit and volume sale can achieve enormous growth scale. Ford Motors is a multinational automaker based in Michigan, Detroit. Henry Ford founded it in 1903 (Ford Motor Co. 2016). It sells most of the luxury cars under Lincoln brand. It owns 2.1% stake in Mazda of Japan and 8% stake in Aston Martin of UK. Ford Motors sell luxury vehicles, commercial vehicles, and automotive parts. Ford has estimated employees of 199,000. As of 2015, total revenue of Ford is US$ 149.5 billion. SWOT analysis can give a clear picture of Ford Motors (Markides, 2013).

Strengths

· High position in American auto market

· 14.8% growth for light trucks

· Biggest automobile market in the US

· Strong financial position

· Proven track record in manufacturing

· Strong dealership network

Weaknesses

· Inability to match production capabilities

· Behind top five automakers Toyota, GM, Volkswagen, Renault-Nissan and Hyundai-Kia

· Heavy dependence on the US and European automakers

· Large operations in Europe has weakened their growth

Opportunities

· New automotive technologies

· Entering alternative fuel car industry

· Growing automakers, expanding in China, Mexico, and India

· Increased levels of e-commerce

· Demand in light commercial vehicle market

Threats

· The growing presence of German and Japanese automobile firms

· Toyota and Honda are ahead in production of fuel cell vehicles

· Mercedes and Nissan are competing with Ford in commercial van market

· Uber and self-driving vehicles could limit the sales volume in future

b) Ford Motors Company competes in the automotive industry. It is currently positioned in top ten companies in automaker industry. The NAICS code for Ford Motors is 441110 (Taghavi & Chinnam, 2014).

The Success critical factors for Ford Motors are,

Efficient channel for distribution

Better cash flow management

Ford is flexible to changing needs

Ford has compliance with local and international standards

Ford has enough joint ventures and mergers

Ford had set globalization plan for this decade

Ford Motors have their competitors in General Motors, Nissan, Toyota, Hyundai, Honda Motors, Renault and Volkswagen (Kumar, 2014).

c) Ford Motors company has faced several challenges and they have been succeeded in arranging strategies and applied them tactfully. They have done changes to float in the marketplace in order to retain their previous market position (Helper & Henderson, 2014).

Globalization and global competition

Ford had to manage a global workforce. They ensured availability of employees having excellent expertise. They ensured real productivity from employees to ensure competitiveness

Mergers and Acquisitions

Ford developed several HR initiatives for workers. They covered up employee insecurity.

Downsizing

Managing organizational relationship with the competitors uplifted the morale of the survivors.

Industry and occupational shifts

Ford has managed the workforce with flexible working patterns. They focused on competencies at the time of hiring. Ford developed proactive worker benefit programs

Technical advantages

Ford strategized a virtual workforce. They managed employee alienation. Ford thoughtfully retained skilled staffs.

Outsourcing

Ford has always managed employee concerns about losing jobs for outsourcing. It lifted employee morale and productivity.

Flexible work arrangements

Ford has managed the loss of supervisory control over work. They developed programs for the motivating flexible workforce.

Educated Workforce

Ford Motor strategized a plan only to hire the skilled individuals so that they do not have to spend much on them

Contingent Workforce

They developed a system to motivate the temporary workforce and eliminate unproductive people from the company. Ford ensured employee commitment


d) They can achieve the goals they have set. Ford Motors Company has strategized well to tackle the key issues they regularly faced in the market. Ford is a century-year-old company, and earlier they were one of the best enterprises in the entire world. Gradually they lost their market share to the newer firms. The top managers at Ford have ensured no more casualties in future (Greiner, 2015).

e) In order to achieve the goals, Ford has to implement greater plans to minimize the weaknesses in them. Ford Motors Company is lacking in introducing new models whereas, their competitors like Renault, Toyota, Nissan, and Hyundai have come up with technologically advanced models. Ford is heavily dependent on the US and European markets; they need to target more to the emerging markets in Asia and Latin America (Helper & Henderson, 2014).

a) The main competitor of Ford Motors is General Motors. It is also an American multinational organization. It has its headquarters in Michigan, Detroit. They produce vehicles in as many as 37 countries. They operate under thirteen brands like Alpheon, Buick, Holden, HSV, Opel, Chevrolet, Vauxhall, etc. GM was founded on 1908. GM has a production output of 9,958,000 vehicles. As of 2015, GM has revenue of US$152.35 billion. They have as many as 216,000 employees throughout the world. GM has recorded an 18.4% market share in US transport market (Maxcy, 2013).

b) General Motors and Ford Motors are two heavyweights in US car market. They are operating their business from the same city in Michigan, Detroit. These are some of the differences between them,

General Motors Company

Ford Motors Company

Market cap: $20.7 billion

Monster Vehicle: Hummer

Foreign ventures: Fiat, Suzuki, Fuji

Market share: 18.4%

P/E Ratio: 8.1

Market cap: $18.1 billion

Monster vehicle: Ford Excursion

Foreign ventures: Jaguar, Aston Martin, Volvo, Land Rover, Mazda

Market share: 15.2%

P/E Ratio: 20.6


Most of the market honchos have predicted GM over Ford motors. GM has been able to stay the nose ahead of Ford in overall share for last ten years. Ford rides on public esteem whereas GM is known for its all-American approach. Ford has managed to utilize global resources than GM (Davenport, 2013).

c) GM holds a greater market share in US market. They are ahead with 18.4% market share, whereas, Ford has a modest 15% market share in US market. Particularly Ford motors have more strengths and weaknesses. GM has fewer strengths and weaknesses than Ford Motors, which have been found from SWOT analysis.

Strengths

· Globally known brand

· It has a worldwide presence

· Operations in 55 countries

Weaknesses

· Diminishing dealership network

· Insufficiency in liquidity

· Inadequate performance among business segments

· Low debt ratings

Opportunities

· GM have growth potential in India and China

· Increased market shares in Truck market

· Rising demand for hybrid vehicles

Threats

· The continuing global recession

· Weakness in global automobile industry

· Intense competition


a) There are several organizational operations have occurred over past decade. By the introduction of more mass production of public transport vehicles, the urgency for producing more and more vehicle has become utmost importance. In an attempt to minimize transaction cost these two companies have started their operational journey in several other countries. The wholesale price of car production has dipped down to 5% in recent years. Since 1990 there are almost 500,000 employees have joined in these two organizations. The globalization of the auto industry has appeared to be a status quo for the labor market. The needs for skilled labors are increasing day by day. US companies mainly automobile companies are exploring emerging markets to find skilled labors at a low cost. In the US, the labor cost is more, and the locals of US charge more than the migrants, so the firms are investing on these migrants. Ford Motor and GM enjoy a global market share of 10 percent and 13 percent respectively. These two companies have volume sales of 24 percent in Russia, 18 percent in India, 17 percent in Brazil, 11.8 percent in Mexico and 10.2 percent in Spain. Ford and GM have strategized upon macroeconomic performances and policies. These automakers pursue portfolio approach for production and marketing relying on fragile economic growth in these regions (Ihlen & Roper, 2014).

b) Ford and GM these two companies have been able to explore the markets of emerging economies and third world countries. They have understood the possibilities of growth and market capturing in these regions. The current stats are helping us to make a prediction about the future growth and market positioning of Ford and General Motors. GM might not be the best automaker company in the world anymore, but they are still one of the most recognized car brands in the globe. 2015 has been a year in which these two Detroit giants have seen enormous growth and profit in different sectors. They piped each other in some close races between them. GM’s Sierra and Chevrolet Silverado and Ford’s F-150, F-series 306, 302, 009 have made great profits in this year (Hill, Jones & Schilling, 2014).

c) In order to keep their superiority in Car market, Ford needs to implement great strategies. Strategies for quality management and product development need to be precise. The branding of Ford motors should be appropriately done to ensure more attainment towards the brand. Another method to attract customers is product designing. For cars, there is a lot of scope for designing new cars. Automatic cars and alternative vehicles are the future of any growth in the automotive industry. Advertising and sales promotions need to be done to eradicate the superiority of GM. GM has more market share than Ford Motors. To break this barrier, Ford should explore the weaknesses to mitigate dynamic lifestyle changes (Christensen & Raynor, 2013).

d) The external threats for GM are,

The continuing global recession

Weakness in global automobile industry

Intense competition

The external threats for Ford Motors are,

The growing presence of German and Japanese automobile firms

Toyota and Honda are ahead in production of fuel cell vehicles

Mercedes and Nissan are competing with Ford in commercial van market

Uber and self-driving vehicles could limit the sales volume in future

e) The potential lies in American auto industry are huge. The global competition has enabled rising prospects in American domestic market. A value chain shift and data analysis of car making companies in America have given an insight of probable pathways in future growth. China and its market have become a global target for market capturing. It has been predicted that by 2020 China would be the biggest marketing hub in the world. China’s emergence has also fuelled the possibilities for global carmakers to enter China for exploring its market (Greiner, 2015).

References:

Christensen, C., & Raynor, M. (2013). The innovator's solution: Creating and sustaining successful growth. Harvard Business Review Press.

Collard-Wexler, A., & De Loecker, J. (2013). Reallocation and technology: evidence from the US steel industry (No. w18739). National Bureau of Economic Research.

Davenport, T. H. (2013). Process innovation: reengineering work through information technology.

Farahani, R. Z., Rezapour, S., Drezner, T., & Fallah, S. (2014). Competitive supply chain network design: An overview of classifications, models, solution techniques, and applications. Omega, 45, 92-118.

Ford Motor Co.: Maximizing the Business Value of Web Technologies. (2016). Hbr.org. Retrieved 21 March 2016, from

Gao, P., Hensley, R., & Zielke, A. (2014). A roadmap to the future for the auto industry. McKinsey Quarterly, Oct.

Greiner, M. (2015). A comparison of lean management in the automotive and telecommunications sectors.

Helper, S., & Henderson, R. (2014). Management practices, relational contracts, and the decline of General Motors (No. w19867). National Bureau of Economic Research.

Hill, C., Jones, G., & Schilling, M. (2014). Strategic management: theory: an integrated approach. Cengage Learning.

Kumar, N. P. (2014). Human resource management in future an obstacle of champion of globalization. Global Journal of Emerging Trends of e-Business, Marketing and Consumer Psychology, 1(1), 49-57.

Markides, C. C. (2013). Business model innovation: what can the ambidexterity literature teach us?. The Academy of Management Perspectives, 27(4), 313-323.

Maxcy, G. (2013). The Multinational Motor Industry (RLE International Business). Routledge.

Taghavi, A., & Chinnam, R. B. (2014). Assortment planning of automotive products with considerations for economic and environmental impacts of technology selection. Journal of Cleaner Production, 70, 132-144.

Zhai, Q., Cao, H., Zhao, X., & Yuan, C. (2014). Assessing application potential of clean energy supply for greenhouse gas emission mitigation: a case study of General Motors global manufacturing. Journal of Cleaner Production, 75, 11-19.

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